A mortgage is a loan secured by your home, repaid over a fixed term — usually 15 or 30 years — through monthly installments that include both principal and interest. Understanding how the pieces fit together helps you compare loan offers, avoid costly mistakes, and choose the right loan for your situation.
What's in your monthly payment
Most mortgage payments are made up of four parts, often abbreviated PITI: Principal (the amount that reduces your loan balance), Interest (the lender's charge for borrowing), property Taxes (collected by your lender and paid to your local government), and homeowners Insurance (required by lenders to protect the property).
If your down payment is less than 20%, a fifth cost — Private Mortgage Insurance (PMI) — is usually added until you reach 22% equity. Use the Mortgage Payoff Calculator to see your full PITI + PMI breakdown for any home price and down payment.
Fixed-rate vs. adjustable-rate mortgages
A fixed-rate mortgage locks in the same interest rate for the entire loan term — predictable payments, no surprises. An adjustable-rate mortgage (ARM) starts with a lower introductory rate for a set period (e.g., 5 or 7 years), then adjusts periodically based on market rates. ARMs can make sense if you plan to sell or refinance before the rate adjusts, but they carry the risk of higher payments later.
15-year vs. 30-year terms
A 30-year mortgage spreads payments over more time, resulting in lower monthly payments but significantly more total interest. A 15-year mortgage typically carries a lower interest rate and builds equity twice as fast, but the monthly payment is substantially higher. Run both scenarios through the Mortgage Payoff Calculator — switching the term with one click — to see the real dollar trade-off for your situation.
Common loan types
Conventional loans: Not government-backed, typically require a 620+ credit score and 3–20% down. PMI applies below 20% down.
FHA loans: Backed by the Federal Housing Administration, allow down payments as low as 3.5% with a 580+ credit score, but require mortgage insurance for the life of the loan in most cases.
VA loans: Available to eligible veterans and service members, often with 0% down and no PMI.
USDA loans: 0% down loans for eligible rural and suburban properties, for buyers within income limits.
How to get the best mortgage rate
Lenders price loans based on credit score, down payment, debt-to-income ratio, and loan term. To get the best rate: improve your credit score before applying, save for a larger down payment to avoid PMI and reduce your loan-to-value ratio, pay down other debts to lower your debt-to-income ratio, and get quotes from at least 3–5 lenders within a short window (rate shopping within ~14–45 days typically counts as a single credit inquiry for scoring purposes).
What's next: refinancing and affordability
Once you understand how a mortgage is structured, the next questions are usually 'how much can I actually afford?' and — once you have a mortgage — 'should I refinance when rates change?' The Affordability Guide and Refinancing Guide below walk through both in detail, with the calculators to back up the math.
Try the Calculators
Related Guides
Frequently Asked Questions
How much down payment do I need for a mortgage?+
It depends on the loan type. Conventional loans allow as little as 3% down, FHA loans allow 3.5%, and VA/USDA loans can require 0% down for eligible borrowers. However, putting down less than 20% usually means paying PMI until you build enough equity.
What credit score do I need for a mortgage?+
Conventional loans typically require a 620+ score for the best terms, while FHA loans accept scores as low as 580 (or 500 with 10% down). Higher scores unlock meaningfully lower interest rates — even a 50-80 point improvement can save tens of thousands of dollars over a 30-year loan.
Should I choose a 15-year or 30-year mortgage?+
A 15-year mortgage costs more per month but saves a substantial amount in total interest and builds equity faster. A 30-year mortgage offers lower payments and more flexibility. Use the Mortgage Payoff Calculator to compare both for your specific loan amount.